According to the Experteye European Leasing Index, the UK has seen a +6% rise in SMR costs since June last year, with forecasted residuals falling by -4.6% over the same period. However, average contract hire rental costs have fallen by -3%; perhaps a sign of an increasingly competitive market.

The Experteye survey tracks forecasted residual values (RV), servicing, maintenance and repair (SMR) costs and rental rates in six European countries using data supplied by major leasing companies. 

Alongside the UK, Portugal is also reporting a -4.6% downturn in forecasted RVs and a +4.6% rise in SMR costs. But elsewhere in Europe the picture is mixed with France seeing improved confidence in the future used vehicle market with a +2.8% rise in forecasted RVs, but a +4.7% hike in SMR budgets, Italy a +1% RV rise and +3.4% SMR, Spain a +1.4% RV increase and +0.4% SMR and Germany showing the most positive outlook of all with a +4.1% RV improvement and -1.1% reduction in SMR.

The consequence is that in a mixed European market, French, Italian and Portuguese fleet operators have seen a rise in their annual rental costs, whereas customers in Germany, Spain and the UK have enjoyed a reduction.

Market summaries – 3 and 12 months to May 2012

France: French customers have suffered the largest rental rate rise since June 2011 with a +2.4% increase. However in the last quarter there has been a -3.5% reduction; the largest drop of all nations surveyed. During the last three months SMR budgets have reduced by -1% and forecasted RVs are up by +0.6%. This is compared to an annual rise in forecasted residual values of +2.8% (the second highest of all nations surveyed) and a +4.7% hike in SMR budgets (also the second highest of all nations surveyed).

Germany: Germany shows the greatest confidence in the future used vehicle market with a +4.1% increase in forecasted RVs during the course of the year. That upward trend has settled to a +0.1% rise for the quarter. Germany is the only nation to report a reduction in its annual SMR budgets at -1.1%. This trend continues with a -0.9% drop since March 2012. As a result, German fleet operators have benefited from a -3.4% reduction in annual rental costs, and a -1.4% drop for the quarter.

Italy: SMR budgets have risen by +3.4% in the last twelve months, albeit reducing by -0.3% in the last quarter. Forecasted RVs have moved upwards by +1% for the year, but have shown a small downturn in confidence of -0.7% in the most recent quarter. For Italian fleet operators, the market is relatively static with a +1% rise in rental rates since June 2011 and a +0.6% increase for the quarter.

Portugal: Portugal sits alongside the UK showing least confidence in the future used vehicle market, with a -4.6% annual fall in forecasted residual values. With no signs of improvement, there has been a -4.8% drop in RVs since March 2012. SMR budgets are up by +4.6% for the year, and +0.6% for the quarter, yet Portuguese fleet customers do not appear to have suffered dramatically with only a +0.9% increase in annual rentals and a +1% rise for the quarter.

Spain: Spain has been relatively stable during the past year with a +1.4% increase in forecasted residual values, a +0.4% shift in SMR budgets and a -0.1% reduction in rental rates. However for the three months since March 2012 SMR budgets have seen the greatest increase across the nations surveyed at +4.7%, with forecasted RVs seeing a +1% rise and rentals hardly moving at -0.1%.

The UK: With forecasted residual values falling by -4.6% for the year, and SMR budgets rising by +6% it is surprising to see rental rates coming down by -3%. However in the last quarter forecasted RVs have remained static (0%), but SMR budgets continue to rise with a +3.9% shift. Rental rates for the quarter are stable with a -0.5% reduction.